The Hang Seng Index went into the midday trading flat
after posting its best week in 2-1/2 months last Friday. The
China Enterprises Index of the top Chinese listings in
Hong Kong slipped 0.1 percent.

In the mainland, the CSI300 Index of the top
Shanghai and Shenzhen listings fell 0.2 percent, while the
Shanghai Composite Index was flat. Both indexes have
been trading in a tight 40-50 point range for more than a week.

"There's some pretty heavy profit taking today after the
strength of last week and with A-shares still sluggish," said
Jackson Wong, Tanrich Securities' vice-president for equity
sales.

Shares of Chinese telcos in Hong Kong eased on Monday after
outperforming last week, with the two smaller players in the
sector seeing bigger losses. China Unicom and China
Telecom shed 0.8 percent and 2.1 percent from two-week
highs set last Friday.

Their larger rival, China Mobile slipped 0.4
percent and was among the top drags on the Hang Seng Index after
jumping 5.8 percent last week. It is still down 2.7 percent on
the year and set for its first annual decline in four years.

Cathay Pacific fell 2 percent following a
statement on Friday that its overall cargo revenue this year is
13 percent lower than in 2011 due to weak demand and high fuel
costs.

Chinese alcohol producers, hammered last week by a
contamination scare involving Jiugui Liquor were
broadly weaker in mainland markets after a rebound on Friday.

Local media reported French carmaker Renault SA is
planning to launch a joint venture to build cars in China with
the country's second-largest automaker.

Esprit Holdings soared 5.1 percent after the
company said its rights issue was oversubscribed by about 7
times. It is now up 39 percent this year on hopes that its new
management can turn the bealeagured Europe-focused retailed
around.